Topic 1 Introduction To International Human Resources Management

Topic 1
Introduction to International Human

Resources Management
1
Managing a global workforce
 Objectives
 Discuss the meaning of international HRM (IHRM).
 Have an understanding of the dimensions
of international HR activities.
 Be aware of the impact of internationalisation on the
activities and policies of HRM.
 Understand the variables that moderate differences
between domestic and international HRM.
Copyright  2003 McGraw-Hill Australia Pty Ltd.

PPTs t/a Human Resource Management in Australia: Strategy-People-Performance 14-2
by De Cieri & Kramar
Managing a global workforce
 Objectives (continued)
 Understand the complexity of operating in different
countries and employing different national categories of
employees.
 Understand the role of strategic HRM in multinational
enterprises.

Three approaches to IHRM
 Cross-cultural management approach

 Examines human behaviour within organisations from an international
perspective.
 Comparative HRM
 Seeks to describe, compare and analyse HRM systems in various
countries.
 HRM in multinational enterprises (MNEs)
 Explores the implications of the process of internationalisation on HRM
activities and policies.

Figure 14.1 Model of IHRM
Source: Adapted from P.V. Morgan, ‘International human resource management: Fact or fiction?’, Personnel Administrator, 31(9),
1986, p.44.
Types of employees in an MNE
 Parent-country nationals (PCNs)

 Employees who were born and live in a parent country.
 A parent (or home) country: the country in which a company’s corporate
headquarters is located.
 Host-country nationals (HCNs)

 Employees born and raised in a host country.
 Host country: a country in which the MNE seeks to locate or has already
located a facility.
 Third-country nationals (TCNs)

 Employees born in a country other than a parent or host country.

Types of international work
 Expatriates
 An employee sent by his/her company in one country
to work in a different country.
 Global team project
 Bringing together employees from different locations
to complete a specific team project.
 Short-term assignments
 Sending employees on assignments, such as a three-
month assignment, to a foreign location.
 Virtual assignment.
 Assignments requiring employees in different locations
to use information technology to communicate on job
projects and tasks.

Factors which differentiate
international from domestic HRM
 More HR activities
 The need for a broader perspective
 More involvement in employees' personal lives
 Changes in emphasis with variable mix of expatriates
and locals in workforce
 Risk exposure
 More external influences

Figure 14.2 Variables that moderate differences
between domestic and international HRM
Source: P.J. Dowling, University of Canberra. Used with permission.

The cultural environment:
key terms
 Culture
 A distinct way of life, shared by members of a group or society, with
common values, attitudes and behaviours that are transmitted over
time in a gradual, yet dynamic, process.
 Culture shock
 A phenomenon experienced by people who move across cultures. They
experience a shock reaction (or psychological disorientation) when
exposed to new cultural experiences, because they misunderstand or
do not recognise important cues.

The cultural environment:
the emic-etic distinction
 Emic
 Culture-specific aspects of concepts or behaviour.
 Etic:
 Culture-common aspects of concepts or behaviour.

Industry type
 Multi-domestic industry:
 An industry in which competition in each country is
essentially independent of competition in other countries.
 Global industry:
 An industry in which a firm’s competitive position in one
country is significantly
influenced by its position in other countries.

Extent of MNE reliance on
domestic market
The ‘top ten’ MNEs on the UNCTAD ‘index of transnationality’

 Nestlé (Switzerland)
 Thomson (Canada)
 Holderbank Financière (Switzerland) [now Holcim]
 Seagram (Canada)
 Solvay (Belgium)
 Asea Brown Boveri (Sweden/Switzerland)
 Electrolux (Sweden)
 Unilever (Britain/Netherlands)
 Philips (Netherlands)
 Roche (Switzerland)

Attitudes of senior management
to international operations
 Ethnocentrism
 The assumption that one’s own cultural approach is
superior to any other.
 An ethnocentric approach to international staffing
typically results in all key management positions being
held by PCNs.
 Also, international HRM activities are typically developed
and administered by PCNs.

Figure 14.3 Framework of strategic HRM in
multinational enterprises
External factors
• Industry characteristics
• Country/regional characteristics
• Inter-organisational networks
Internal organisational Strategic HRM MNE concerns

factors • HR function strategy & goals
• MNE structure • HR practices • Competitiveness
- Structure of international • Efficiency
operations • Balance of global
- Intra-organisational networks integration & local
- Mechanisms of coordination responsiveness
- International entry mode • Flexibility
• MNE strategy
- Corporate-level strategy
- Business-level strategy
• Organisational life-cycle stage
• Experience in managing
international operations
• Headquarters international
orientation
Source: Adapted from H. De Cieri & P.J. Dowling, ‘Strategic human resource management in multinational enterprises: theoretical and empirical
developments’, in P.M. Wright, L.D. Dyer, J.W. Boudreau & G.T. Milkovich (eds.), Research in Personnel and Human Resources Management in the
Twenty-First Century, supplement 4. JAI Press, Stamford CT, 1999, p.318.
Summary
 Three main approaches have been applied to

the study of international HRM.
 Several variables moderate differences
between domestic and international HRM.
 Strategic HRM research examines the
relationships between internal organisational
characteristics, HRM strategy and practices,
and firm performance or competitive
advantage. The evidence is inconclusive and
important questions remain
about the nature of these relationships.

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Topic 1

Introduction to International Human

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

 Cross-cultural management approach

Copyright  2003 McGraw-Hill Australia Pty Ltd.

 Parent-country nationals (PCNs)

 Host-country nationals (HCNs)

 Third-country nationals (TCNs)

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Source: P.J. Dowling, University of Canberra. Used with permission.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Copyright  2003 McGraw-Hill Australia Pty Ltd.

Internal organisational Strategic HRM MNE concerns

 Three main approaches have been applied to

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